One of the compelling arguments for Obamacare was the need to address the
problem of pre-existing conditions. If you fall ill and lose your job, or if you wanted to
switch employers, you face the challenge of finding insurance that will cover your “pre-
exiting conditions.” There are solutions to this that would not require passing legislation
with over 2700 pages, but Congress rejected those ideas.

The problem before Congress was what to do before Obamacare was fully
implemented. Some suggested the government create “high-risk pools” that would
provide a special, subsidized insurance plan for people with pre-existing conditions.
Although the idea might have been sound in principle, it was easy to see even two years
ago that these would be shallow pools.

The pools were required to take anyone regardless of their pre-existing condition
as long as they had been uninsured for six months. Moreover, these pools were also
seriously underfunded. There were too many people in the pool and too little funding for
those people. It is not surprising that news headlines announced two weeks ago and
money was running out. New applicants have already been shut out of most of these state-
based high-risk pools, and the rest will be shut out by this weekend.

There is another reason why the plan failed. The government has consistently
been inaccurate in pricing risk. Critics doubted whether the $5 billion allocated by
Congress for the Pre-Existing Condition Insurance Plan would be enough. It wasn’t.
Insurance for the people in the plan turned out to be more costly than predicted.

Government incompetence in estimating risk isn’t the only reason for higher
costs. People who lack medical insurance are more likely to go untreated. Usually that
makes their medical condition worse. When they do get coverage and begin treatment,
the medical costs and complications are higher.

This pre-existing insurance plan is only a stopgap measure. But if you want to get
a preview of Obamacare, this is a good example of the future.